House Bill Could Kill Private Student Loan Debt Collection

A bill to be introduced possibly this week would require employers to withhold student loan payments from the paychecks of workers. The withholding would be subject to limits based on income. The reporter notes that it may eliminate the need for private debt collection agencies currently used by the Department of Education.

According to a story running on Bloomberg Tuesday, U.S. Representative Tom Petri (R-Wis.) has said that he may introduce the bill as early as this week.

The main provision of the bill would require companies to withhold federal direct student loan payments from their employees’ wages, as is the common practice with income and Social Security taxes. The amount withheld from each paycheck would be capped at 15 percent of income “after basic living expenses.” The Department of Education (ED) and the IRS would manage the system.